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MBI course Logistics 2005

MBI course Logistics 2005. Lecture 2 IT and SCM Marjan van den Akker. Outline. Case example Supply chain management systems Transactional and analytical IT Decision support systems Operations research, optimization Software. Case example: a large retailer. Case example (2).

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MBI course Logistics 2005

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  1. MBI course Logistics 2005 Lecture 2 IT and SCM Marjan van den Akker Logistics, lecture 2

  2. Outline • Case example • Supply chain management systems • Transactional and analytical IT • Decision support systems • Operations research, optimization • Software Logistics, lecture 2

  3. Case example: a large retailer Logistics, lecture 2

  4. Case example (2) • The retailer wants an IT-system for distribution • Which issues? • Functionality? Logistics, lecture 2

  5. Different issues • Communication with truck drivers • Keeping track of inventory level • Daily route planning • Re-ordering strategy for inventory • Transportation capacity • Structure of distribution network Logistics, lecture 2

  6. Different time frames • Strategic: 1-5 years • Tactical: 3-12 months • Operational: 1-28 days Logistics, lecture 2

  7. Daily route planning Input data Analytical tool Presentation tool Trucks Customers Distances, Time windows …… Optimization: find route plan with minimal cost or distance Tables Graphics …… Logistics, lecture 2

  8. ERP • Transactional data on: • Manufacturing • Distribution • Finance • Sales • Human Resource This is not all !! Logistics, lecture 2

  9. SCM systems Strategic Optimization Modeling System Tactical Optimization Modeling System Demand Fore-casting and Order management System Production Planning Optimization Modeling System Logistics Optimization Modeling System Production Scheduling Optimization Modeling System Distribution Scheduling Optimization Modeling System Material Requirements Planning Systems Distributions Requirements Planning Systems Enterprise Resource Planning Systems Logistics, lecture 2 External Data Management System

  10. OLA Ice cream • Functionality of the following SCM systems • Strategic • Tactical • Production planning • Production scheduling? Logistics, lecture 2

  11. Transactional and analytical IT • Transactional IT: acquiring, processing and communicating raw data • ERP • E-commerce • Transactional databases • Analytical IT: supply chain planning Logistics, lecture 2

  12. Analytical IT: Important SCM issues • Design of production plants • Design of distribution network • Supplier relations (make-or-buy) • Inventory control • Production planning and scheduling • Transportation planning and scheduling Logistics, lecture 2

  13. Newspaper • Has different editions for different regions • Planning for tomorrow’s newspaper (given that content and layout are finished)? Logistics, lecture 2

  14. Logistics, lecture 2

  15. Analytical IT • Descriptive models • Demand forecasting • Data mining • Cost calculation for a given scenario • Normative models • Optimize decisions on supply chain options Logistics, lecture 2

  16. Analytical IT: a component Input data Analytical tool Presentation tool Transformed data Tables Graphics …… Optimization Logistics, lecture 2

  17. Analytical IT ~ Decision support system • “....supply chain management problems are not so rigid and well-defined that they can be delegated entirely to computers. In almost every case, the flexibility, intuition and wisdom the are unique characteristics of humans are essential to manage the systems effectively. However, there are many aspects of these systems that can only be analyzed and understood effectively with the aid of a computer. It is exactly this type of assistence that DSS’s are designed to provide.” Logistics, lecture 2

  18. Example • Travelling salesman problem Logistics, lecture 2

  19. Example • How to organize a store plan? • Groceries • Car care • Merchandise • Drinks • Snacks • News • Dairy • Quick service Logistics, lecture 2

  20. Normative models • Operations Research • Linear (integer) programming • Heuristics • Most widely used normative models in SCM • Simulation • Evaluation, handle uncertainty, multiple criteria • Artificial Intelligence • Agents: architecture, distributed context • Constraint programming Logistics, lecture 2

  21. Operations research: (mathematical) optimization • Find within the collection of possible SCM planning options the one that minimizes cost or maximizes revenue • min cost/ max revenue over all possible decisions and make sure that constraints are met • Cost/revenue and constraints linear: (Integer) Linear programming Logistics, lecture 2

  22. More criteria: trade-off Customer service Cost Logistics, lecture 2

  23. Software • Transactional IT • ERP systems (SAP, Baan, Manugistics, J.D. Edwards) • Analytical IT • Advanced Planning and Scheduling (APS) systems (SAP APO, i2, J.D. Edwards SCM, ….) • Tailor-made planning systems (CQM, ORTEC, OM-partners, GDE) Logistics, lecture 2

  24. Example • www.koeriersoftware.nl • From administration to route planning • Planning brings significant cost reduction Logistics, lecture 2

  25. B2C E-commerce • Innovations on marketing and sales side • Still: deliver the correct product to the correct location at the correct time for a competitive price!!! • High expectations from customers • Problem of the last mile!! Logistics, lecture 2

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